L&T goes in for a big shake-up again

MUMBAI: Demands from large overseas engineering projects and a worrying attrition rate have prompted Larsen & Toubro, India's largest engineering company, to restructure its divisions into independent verticals. This is the second big organisational revamp in the Mumbai-based company in five years.

The current move is aimed at creating a leaner structure with several verticals that will execute projects in different sectors and address employee turnover by creating leadership opportunities, said a senior executive.

"We want to have verticals in each division that will provide services in all areas from manufacturing to projects to construction as a onestop service," president (operations) and member, L&T board, K Venkataramanan, told ET. The Rs 15,000-crore L&T is one of the largest companies in India's private sector with a market capitalisation of Rs 48,478 crore, and with additional interests in manufacturing, services and information technology. The tone of the company's current exercise is similar to the restructuring in 2000 when it announced its intention to hive off its cement operations and charted out a blueprint for L&T Infotech, its software and technology arm.

While the earlier restructuring was recommended by Boston Consulting Group, the current exercise has been worked out mostly in-house. The main reason for creating the verticals is to simplify operations so that one project in a sector can be handled by a specialist team that will provide all expertise.

Earlier, a project in the power sector would be serviced by separate divisions in the manufacturing, project & construction units; this will now be handled by a team in a single vertical.In 2004, L&T sold its cement unit, Ultra-Tech to Aditya Birla group company Grasim for Rs 2,200 crore.